Gap Inc CEO stepping down; head of digital taking over by Phil Wahba @FortuneMagazine October 8, 2014, 5:20 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The executive who heads Gap Inc’s digital business and was instrumental in repairing the retailer’s flagship brand in North America a few years ago will take over as the company’s CEO, replacing Glenn Murphy. Murphy’s resignation, announced on Wednesday, comes after a seven-year stint as Gap’s leader. He is being replaced by Art Peck, who has held various roles at the company including leading the North American business for the Gap brand and the outlet business of Gap and Banana Republic since joining in 2005. On Murphy’s watch, Gap Inc has expanded in Asia, and acquired and grew brands such as Intermix and athletic wear retailer Athleta. But more recently, Gap and its Banana Republic businesses have posted uneven results, raising questions about how sustainable improvements in recent years have been. On Wednesday, the retailer gave little hope that its Gap stores will turnaround anytime soon. Same-store sales at the company’s namesake brand fell 3% last month. Meanwhile, Banana Republic’s sales grew 2% while Old Navy gained 1%. Gap expects gross margin will be lower this quarter, after cutting prices because of disappointing sales. Murphy said there is work to do to improve sales at the company’s Gap stores. Business there has struggled this year after strong sales of brightly colored jeans in 2013 tapered off. Murphy, was hired as Gap Inc CEO in 2007 after serving six years as chairman and CEO of Shoppers Drug Mart, the largest drug store chain in Canada. Gap said he would step down on at the end of January for personal reasons. Murphy said that he has no plans beyond then. But he did say he just couldn’t make the long-term commitment to Gap that’s needed for its next stage. Bob Fisher, a one-time Gap CEO whose parents founded the company and whose family is Gap’s top shareholder, will become non-executive board chairman. He had previously been a director. Peck raised his profile a few years ago when he fixed Gap’s GPS sluggish sales by deciding to close 200 stores. More recently, he has accelerated Gap’s efforts to integrate e-commerce and its stores. Peck was also heavily involved in the acquisitions of Intermix and Athleta, with the latter expected to emerge as the company’s next chain. Peck said on a call he would pursue global growth, which has included forays into India and China, and to continue to invest in digital. “I steadfastly believe in store. I steadfastly believe in digital,” Peck said.